Several eurozone bond auctions held on Tuesday boosted confidence due to their positive results

EUR/USD

Euro-dollar closed in New York at 1.2735, off pullback lows of 1.2711, after the rate had seen highs earlier in the session of 1.2810. Risk appetite reemerged into Asia, with early demand lifting the rate from its opening level at 1.2735 to an eventual high of 1.27876. Euro short covering in several crosses, notably EUR-Aussie and euro-CAD, aided the move. The positive sentiment was seen as a reaction to reports that Greece was nearing a debt deal with private creditors, as well as speculation that China could cut its RRR before the end of the month. The market appears to want to be positive towards risk but remains aware that this sentiment could be quickly reversed on negative headlines (eg Greek debt agreement failure). Offers are seen in place from around 1.2790 and said to extend 1.2810 to 1.2820. Further offers at 1.2840-1.2850. Support seen into 1.2740-1.2735, stronger between 1.2710-1.2700.

GBP/USD

Cable closed in New York at 1.5334, after pulling back from session highs of 1.5405 to 1.5321. The rate marked overnight lows at 1.5330 into early Asian dealing before getting dragged higher by euro-dollar’s stronger recovery, the move lifting euro-sterling from 0.8305 to a high of 0.8330, as cable clawed its way to a high of 1.5360. Cable was holding off best recovery levels into Europe. Offers remain at 1.5360, a break of 1.5363 to expose the stronger area between 1.5375-1.5385. Above here, the rate can edge back towards 1.5400-1.5410. Support now seen at 1.5330-1.5320 – a break to open a deeper move towards 1.5310-1.5300, ahead of 1.5275-1.5270. Euro-sterling offers remain at 0.8330, a break to open a move towards 0.8345-0.8350. Support at 0.8280.

Gold

Gold prices moved higher yesterday, aided by higher crude oil prices amid a general ‘risk on’ trading day. Comments from the GFMS also helped sentiment, with expectations of 2000/oz forecast for 2012 or early 2013 on the back of global economic concerns. Physical buying has also picked up along with new demand from sovereigns such as Mexico and Korea. The metal opened yesterday at 1,643.70 and climbed sharply in Asia and Europe to 1,667.70 before easing back in New York to 1,650.35. A small rally was seen into the close at 1,652.10. Asian markets saw an initial dip back to 1,643.90 before jumping back up to 1,658. Support today is at yesterday’s lows of 1,642 and 1,631.50 with resistance at 1,667.70 and 1,678.25.